Tax season is overwhelming for almost everyone. Each year you face the same question: “What do I need to do my tax return?” Part of the answer, like your tax documents, is obvious. The other part of the answer: organization. To make your life simpler, get organized before you try to file anything. You’ll be happier and less stressed when April 15th rolls around.
Organize Your Office
Tax preparation is hard enough when you have everything organized and perfect. That’s why you should clean and organize your home office before you start preparing tax returns. Invest in small self-storage solutions like shelf boxes and plastic bins to help organize your office supplies. Recessed wall storage is a big space-saver to consider. Get a label maker and label everything so you don’t forget your system and so you can find (and put back) everything with ease.
Office organization is also about your office’s layout. Is your printer hard to reach? Do you keep your extra staples somewhere very far from the stapler? Think about how to arrange things to make working easier. If you don’t have a Wi-Fi printer, then you need to put it in a place where you can easily connect it to your laptop. If getting to and from your desk is tough because the rest of the room is cluttered, get some boxes and move that stuff. Storage units are a simple way to quickly remove clutter from your house.
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Color Code Your Documents
Your home office holds many important documents, like your financial information, contracts, mortgage documents, and more. Don’t just shove all those documents into a drawer, or create a pile on your desk. Get multicolored folders and sort your documents.
When sorting your documents into color-coded folders, splitting hairs is a good thing. Assign each category of document a color (like home insurance documents in orange folders). Then, use several of those colored folders to sort the documents within each genre. Label each folder, and finding what you need becomes so much simpler. Organize tax documents by assigning them a color and sorting your information, and always remember to group by year.
Use a Filing Cabinet
Once you’ve color-coded your documents (including your tax documents), you need a filing cabinet for all those fabulous colored files. Most people make the mistake of buying a filing cabinet that’s too small for their needs and end up stacking papers and folders on top of it when it gets full.
Keep in mind that you don’t have to settle for a tall filing cabinet. Lateral options, which use wider drawers to accommodate two rows of folders, are also available. Take into account the amount of space you have in your office, then opt for one drawer more than you think you need.
Make a List (and Check It Twice)
You’ve got a lot of documents to pull together before you’re ready to file your taxes. That’s why when figuring out how to prepare taxes you should always make a list. Your tax preparation checklist will have two parts: The first should include every document you require before you can sit down and file your taxes. The second part should include any actions you need to take (like calling your accountant or going online to download statements from your financial planner) before you can file your taxes.
You’re supposed to keep paper copies of some documents, but most paper copies you’ve got hanging around your office can probably go. Start with paperless billing. Those paper bills you get every month needlessly take up space. Having them in an email folder on your computer is just as easy as having them sitting at the corner of your desk. Plus, auto-debiting your bills makes your life a little simpler.
Take the same approach when preparing for tax season. You’ll either be emailing your tax documents to an accountant or filing your taxes online. So having a digital folder with all your documents will make your life much easier. Scan the documents that came in the mail so you can save them to your computer. If you have the option with your employer, choose digital W-2s instead of paper ones. Save your paper documents, but this way if you misplace them, you have a digital copy that may be of some use.
Keep Old Records and Returns
When organizing tax information, check with your tax professional about what he or she recommends as an optimal amount of time to keep your old returns and associated documents. For example, Bankrate recommends that you keep your records for the past three years unless you have extenuating circumstances like fraudulent returns or issues with reporting your correct income. After the amount of time that has been recommended for you, the best thing to do is to shred those documents so nobody can steal your information.
Now you know how to prepare for tax season. Once tax season is over, you’ll have an organized office with a filing cabinet and color-coded folders. Working from home will be more convenient, and you’ll already be organized for tax season next year.